Angola Beyond Oil & Gas

Arnout Nuijt, Editor-in-Chief of Atlantico Weekly/Angola Business News and CEO of Atlantico Business Development, a consultancy based in Rotterdam, recently spoke to Mrs Maria Luisa Abrantes, director of ANIP, the Angola Investment Agency.

Mrs Abrantes, thank you for talking to Atlantico Weekly’s Angola Business News. You have come to the Netherlands to attract new investors to Angola. So, let’s start with a very simple question: why should Dutch companies invest in your country? Well, at this moment getting investment in general is hard, with all the international economic problems on hand. But investors that look for growth, economic stability and political stability can find all of that in Angola. We have those natural resources that will be needed in the future, including water, which one day may be more important even than oil. Water is a highly important item, that is necessary for all development. Angola for example possesses around 12% of all water resources in Africa. Unfortunately, all these assets end up in our rivers and then head straight to the sea. In the case of the Netherlands we would like to get assistance to use these water resources more efficiently for irrigation to end our farmers’ dependency on rain. In fact, modernisation of our agriculture presents an opportunity for Dutch companies. Then there is tourism. We have a 1500 km coastline, that we’d like to develop with the help of Dutch companies, creating resorts, maybe even some artificial islands. We need expertise from both the Dutch water management sector and the maritime sector. We once had some companies in the maritime sector, but they are no longer there, so we’d like to see some new ones. Angola eventually may welcome participation by private partners in the management of some of the new ports, that are now entering their construction phase. And finally we are also welcoming Dutch investment in the food, education and health sectors. Please note that I have only mentioned those sectors where investment seems most viable to me.

So, did many Dutch companies already find their way to Angola? Well, unfortunately, the balance of the years between 1990 and 2013 is rather poor. Direct investment from the Netherlands is still relatively low and restricted mainly to the oil and gas services sector. But the Dutch government has a wide spectre of instruments to support the country’s companies abroad and these include small financial subsidies. I therefore think that only with the Dutch government’s financial support will we see more Dutch investment in Angola.

With respect to Angola’s competitiveness, is it hard to convince companies to come to your country? Well, basically I had the advantage to talk to businessmen who already know that they want to come to Angola. They have presented their proposals already to ANIP. It does not take a long time before the proposal gets our approval, but of course it does take some time. There were some problems because a couple of the companies first started talking to several ministries in order to open their business. Only now have they turned to ANIP, after they lost a lot of time. To be clear: making contact with ANIP should always be the first step for every investor. ANIP is in charge of the investment procedures and no one else. ANIP is also the entry point for all foreign investments, except in the case of tenders. In the case of a tender or public private partnerships, ANIP can be the process manager, but the process can also be started at the Ministry of Economics, before being finalised by ANIP. Applications for acquiring licences for oil and gas exploration blocks have to be filed with SONANGOL, the state oil company, followed by further procedures at the Oil Ministry, while the process will be fully completed by ANIP.

So what exactly is the role of ANIP? Is it a one stop shop where you can get information or do you support a foreign investor during the whole application process? ANIP promotes investment, while showing the mechanisms, legislation and steps involving an investment project. ANIP also evaluates the projects and after a project is accepted ANIP also monitors its implementation. We will check if contracts are honoured by the foreign party and if the company is not doing other things than agreed. We make sure the company follows Angolan regulations on hiring local staff. Last but not least we make sure there is the required level of transparency, because Angola has an anti-money laundering law in place and because there is a lot of corruption in our country. Allow me to mention that for some years the US Treasury Dept sends advisors for short periods to the Angolan National Bank at our invitation.

What are the main challenges in Angola for a foreign investor, like buying land, hiring or training staff, etc? I think purchasing land is the most difficult part. Private land is very expensive in Angola at the moment. Most investors want to install themselves in our capital cities. Especially in Luanda, because that is where most consumers are, something that is very important to most of our foreign investors. So that’s where land prices are highest. In the rest of the country they are much lower. But so far few companies are interested to go into the interior. Concerning the issue of land, I must mention that there is also land that belongs to the state. This public land can be held in concession for 60 years, a period that may be renewed. But if you want to be in complete control of your terrain, you must buy it from a private owner. Like I said, privately held land comes at a higher price. You can get cheaper public land, but you will not have life time ownership. This is not strange, there are even European countries who practice this.

Does Angola provide tax benefits or tax holidays for new investment projects or do you run special zones? Yes, we have recently set up special zones. The first one was inaugurated in 2011. We have several now operational and others are still awaiting inauguration. We also have tax exemption possibilities for the whole country, but the period of exemption depends on the area. In areas where there is plenty of infrastructure the exemptions are lower and in areas that have less infrastructure exemptions are higher. Business is of course more difficult there.

Recently the Angolan government announced a wave of privatisations. Up to 33 state enterprises will be sold. That may bring a lot of new opportunities for investors. Could you say something more about these privatisations? I can confirm that what we know now. Angola indeed has the intention of privatising these 33 companies, but what we don’t know is how and when this will happen. We are still studying on it. That is why they did not really announce which companies will be privatised. But this decision will be made in the next few years, at the latest in 2016. Nothing is concrete yet. But it is not a new phenomenon, because we already privatised the majority of state companies. Some companies however were never sold for the full 100% and now these partially privatized companies may eventually be fully privatised. And in the case of the insurance company: this company will be also be privatised but we don’t know yet to what extent. We may also eventually privatise a transport company, but in the long term only.

What does Angola demand from foreign investors in terms of local content, like hiring a certain number of local staff, buying local products, etc? This legislation that obliges the use of local content is meant only for foreign companies that render services to the oil and gas industry and for foreign oil companies. We had to do this because Angola did not profit in several respects from the oil and gas industry. For instance few Angolans where finding work in this sector. In the past any foreign company could participate in these activities without any obligations, but then Angolans remained outsiders to the mining and oil industries. And because the oil and gas sector employs few Angolans, we had to stimulate our Angolan entrepreneurs and demand that foreign companies in the oil and gas sector associate themselves with Angolans. So now in these associations 50% must be in Angolan hands. But Angolans can also participate in such partnerships with for example a catering company or a maintenance company, etc. So only in the oil and gas sectors do we have these obligations. But in all other sectors of the Angolan economy, it is not obligatory to associate yourself with an Angolan party.

Besides Luanda, the capital city that already saw a lot of investment, are there any cities or regions in Angola that are now attracting more investment than others? Indeed, unfortunately most investment is still turned to Luanda. But it is only logical that we now see more interest from investors in other provinces. That’s because we are building infrastructure all over the country. For example, some years ago there was hardly anything in Porto Amboím. But from the moment we announced the new shipyard and port for that town, other businesses started to appear. The same happened in Soyo. From the moment we started the LNG project and the new port, other companies emerged to invest in Soyo. The same is happening now in Cuando-Cubango. And we also see a lot of interest from foreign companies in the huge Okavango project, which stretches out over five countries. In my experience from Angola, I see that foreign investors are attracted first to places with many consumers and secondly to places with good infrastructure. So in Angola we must think about improving our infrastructure in order to get more foreign investors. We also invite foreign investors to join our investment in infrastructure, within the context of public private partnerships. Yes, that’s an invitation!

Mrs Abrantes, thank you very much for this interview. It was my pleasure. People are also welcome to take a look at the ANIP website.